Adjusting your business to the new, digitised world is a must, no matter the industry. But there are those that need such digital transformation more than others, finance being one of them.
- What is a digital transformation?
- Why banking and finance industries need digital transformation?
- Five most important challenges for finance institutions
- Why financial institutions need a reliable IT partner, experienced in the strategy building?
Let’s take a closer look at the process of digital transformation in finance and how to make it run as smoothly as possible.
What is digital transformation, exactly?
In a world where everything is done online, digital transformation has become very necessary. It is described as the incorporation of digital technology throughout all business functions, and it affects how businesses interact with new types of clients. However, in order to meet their demands, organisations must assess how they operate and think. Understanding the changes that are occurring in society, markets, and customer behaviours is the most critical stage in this process.
Doing things the way they “used to be done” is no longer acceptable, nor is believing that becoming more digitally aware is merely another IT strategy rather than a process that encompasses all aspects of a company’s operations. This is why digital transformation may be difficult and time consuming.
Why is digital transformation necessary in the banking and finance industries?
As with many businesses, the recent pandemic had a significant influence on the banking and financial sectors. Within a few months, the entire globe got online, altering our perceptions and operations. Everyone suddenly want access to all services through computer or, much more difficult, mobile device. According to the most current McKinsey Global Banking Report, Annual Report:
This, combined with changing client expectations in terms of availability, personalization, and simplicity of transactions with various organisations, meant that many financial institutions began to place an even larger focus on new technology.
Simultaneously, the fintech world accelerated. It became clear that only those players that implemented digital transformation swiftly and smoothly would be able to attract new clients. Because of the significant increase of fintech start-ups, bigger institutions have to reconsider their digital strategy in order to remain competitive.
Regulations and emerging trends like cryptocurrencies, blockchain, and biometrics are also significant factors in the banking sector’s urgent need for digital transformation. The industry is evolving quickly, and in order to keep up, banks must be able to adapt those developments and make them available. Additionally, because of the economic crisis, expenditures are much more crucial than before, benefits are cut, and interest rates are negative. Utilising automation and modern technology is one of the finest methods to solve this issue.
The top five issues facing financial institutions
The banking and financial sectors confront several difficulties today. The following are the top three:
the requirement to shift from a product-centric to a customer-centric mindset
We live in a society where the consumers are king, and only those institutions that comprehend this reality will endure. Customers like being catered to and prefer services that can be accessed on the go. Banks must adopt new technology and become more nimble in order to do that.
Costs are kept as minimal as feasible.
Financial organisations may save a lot of money by automating processes and transforming to the digital world. Going digital and transferring certain services from physical locations to virtual ones is crucial since it provides for cost savings on things like rent, staff pay, and training.
staying current with cybersecurity challenges
Due to the enormous growth in online shoppers, cybercrime has also increased significantly. According to research, 96% of all financial transactions and 93% of all fraud attempts in Q1 2021 involved internet banking. To safeguard clients and institutions and to work in a secure cloud environment, digital transformation must be directly correlated with a new degree of attention about cybersecurity risks.
Taking care of customers and the reputation of the brand
Nowadays, it is simpler than ever to switch from one organisation to another because there are so many organisations and businesses providing comparable services. Frequently, it simply takes one click. Because of this, grabbing the customers’ attention at the appropriate moment and in the appropriate manner is just the start. Financial institutions must interact with them frequently, provide them with what they need (preferably even more than that), and yet keep them satisfied in order to maintain them for a longer period of time.
Using and seamlessly integrating new channels and technology
Financial organisations should adapt fast to the rapidly changing digital environment. The only way to go forward if they want to remain competitive is to incorporate new platforms and technology (like SEO and RSS) into their operations. aware of every change.
Why do financial institutions require a dependable IT partner with strategy-building expertise?
Given the vast array of advantages associated with the digital transformation of the banking and finance sectors, it is understandable that many financial organisations place a high priority on becoming more tech savvy.
They must be prepared for scale-up as well as for other revolutions, such as biometrics, blockchain, NFTs, and cryptocurrencies, which are taking place as you read the book. It should go without saying, yet in 2021, just 27% of banks implemented a digital transformation plan.
Why? The most frequent concern is straightforward: without any prior expertise, it might be challenging to begin developing a whole new method of functioning. And locating, appointing, and keeping the appropriate personnel for the Given the severe dearth of qualified IT candidates globally, the work is quite challenging.
Making the decision to undergo digital transformation is a difficult one, but doing it successfully depends on selecting an experienced IT partner. Given that they have collaborated with several significant figures in the banking sector, Future Processing is one of the IT firms worth taking into consideration.
WHO THE AUTHOR IS
José Manuel Pérez Ariza is a senior professional with extensive experience in management, technology, operations, processes, quality, and the development of people in multinationals in the financial sector. He serves as the Director of Digital Transformation and Technology and Operations and reports to the management committee.
He emphasizes the income statement, the differential value contribution, effectiveness and efficiency, quality, anticipation, leadership, dedication, and team management. More of his writings may be found here.